Faritec nil trade letters

[#1]

So here is an interesting phenomenon, I have just been given an opportunity to get out of a trade at profit, thanks to a rights issue. I can sell these FRTN's at 2c and dump my FRT's at 6c and still walk away with profit. That was a freebee!

[topgun]

But what about the massive turnaround potential???

[#3]

Well money for nothing is better than the risk of wait and see. I would take the cash and sit on it and "when/if" the turn around happens then give some cash back to grow again.

[#4]

Opportunity gone - FRTN down to 1c. And Topgun, I didn't sell, I bought these for the turnaround potential, not the quick buck. I still think FRT has good potential to turn around, although i have significantly revised my profit targets - given the massive share dilution that is about to take place.

[rsalie]

And how long do u think this turnaround will take. Personally it is too far over the horizon for me to want to to get some.

[#6]

Who is their biggest client? Is it not one of the banks?

[topgun]

My question was tongue in cheek but with Tomlinson now gone and new controlling shareholders with different and more rational business objectives there may just be some hope now...

[rsalie]

skaaptjop, FRTN is back at 2c, hopefully u got in early at 2c which means that u should get what you wanted (over million at offer at 2c).

[#9]

Ja but by my calculation, I am better of holding. The rights issue is at 3c - which will make the nil trade letters worth 3c, but will pull down the value of hte originals to 3c as well. I will lose around 1% if that scenario pans out. But rights issues rarely stick around at the issue price, and penny stocks in the 3c range are the really worthless ones, like imunity, john daniels, or milkworx. So i would expect the share to up itself to the 4c mark, which will put me nicely in the money, with about 25% profit off the mark

[saash]

Lol. This company has turned out to be a joke. I knew I shouldn't have gone in when I saw they didn't seem to have a company secretary :-/

[rsalie]

skaaptjop, since we will be paying the 3c for the new shares, at 4c it will be the equivalent of selling them now (when u didn't pay for the N shares) at 1c. Right? So selling at 2c means the equivalent of selling at 5c after u paid the 3c for the N shares?

[#12]

Maybe, but they still have potential for a billion rand turnover in a predominately services oriented environment (i.e. lots of variable cost). I am still betting on a turnaround. I should add though that I am not one of those that got their fingers (and other extremities) burnt when the fanfare was out in full force at R1 per share

[rsalie]

Well skaaptjop, well done on that. I do think that any buying of FRT right now should be for the long term. If they do come right, this mother will blow !! PS: given the volumes traded in the FRTN shares, it seems the vast majority of holders are exercising their N shares.

[#14]

salie, my response was to saash, your post was put in at exactly the same time. I don't understand your thinking in how you work out the pricing?

[rsalie]

Working out the price ... First scenario ... sell FRTN ... no cost in buying them so whatever u get as the selling price is the profit e.g. 1 share at 1c = 1c profit Second scenario ... keep FRTN which means u have to exercise your options and buy the shares at 3c. So cost for 1 share would be 3c. So if u then sell them at 4c it means u make a 1c profit. Do u agree? I excluded brokerage and others to try and keep the example simple.

[rsalie]

Hi all, A bit confused reading the SENS. By when does one have to instruct your broker that u will be exercising your allocation of shares? regards

[og]

Well you have four options - read e-mail sent to investors AND the default option is the "Lapse" option Rgds

[rsalie]

Thanx og